These have now all been nationalised: not in the sense that they are part of government, rather, that we now seem to have one national system of equity capital allocation.
Definition of private equity: a marvelous system for creating wealth by trading an existing stock of assets back and forth at ever higher prices.
What happens to private equity may be a leading indicator of how the crisis in the financial system will affect the rest of the business world, both because private-equity deals are so dependent on large amounts of debt, and because many of the shrewdest judges of corporate value work for private-equity funds.
However, despite this infusion into the system, the equity markets still lost 25% of their value since the program was initiated.
Once formally agreed by parliament and member states, the law will begin the most complex and far reaching overhaul of the banking system since the credit crunch, requiring banks over the next six years to strengthen their buffers of equity and liquid assets to Basel standards.
Hedge funds, private-equity firms and other parts of the shadow banking system should go, along with over-the-counter derivatives (OTCs), collateralised-debt obligations (CDOs) and other nefarious structured products.
Our banks in 2008 and 2009 were forced by our OCC, FDIC, and Treasury Dept. to raise hundreds of billions in new equity capital which recapitalized the entire US banking system.
John Wheeler, senior manager of equity trading at American Century mutual funds, figures the current system imposes a 0.5% trading cost (one-way) on big orders, between commissions, spreads and the impact such orders themselves have on prices.
Today, private equity is a single global industry at the heart of the capitalist system, managing far more money than seemed possible in the 1980s (see article).
"The Rise of the Industry Operating System", by Tom Berquist et al. Goldman Sachs Global Equity Research, November 2000.
Loading banks with equity slows the creation of credit, but the reward for a healthy financial system is faster growth over the long term.
ECONOMIST: The banking industry: Three trillion dollars later... | The
Over the last several years the Employees Retirement System of Rhode Island has increased its allocations in alternative investments, including hedge funds and private-equity funds, to 25 percent.
FORBES: Educating Gina Raimondo, Rhode Island's Wall Street-Friendly State Treasurer
They say a radical overhaul of the commission system in Britain makes little sense when America, the world's largest equity market, will continue with today's arrangements, soft commissions and all. (Softing is more generous and more widely used in America than in Britain.) To have a different commission system from international peers would put British fund managers at a disadvantage, or so say London money-men.
The system, called Liquidity Builder, will survey several cash equity and options markets and predict the availability of a Pipeline block trade to match that.
Martin Weale, the director of NIESR, said that the government would need to put more equity into the banking system so that it was better capitalised.
For decades some economists have criticized the lopsidedness at the core of the U.S. tax system, which taxes the returns on debt once but the returns on equity twice.
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